Chapter 9: New Product Development and Product Life-Cycle Strategies

Part Two - Short-Term:

Product’s Planned Price

Distribution

Marketing Budget

• Part Three - Long-Term:
• Sales & Profit Goals
• Marketing Mix Strategy

• Marketing Strategy Statement Formulation

• Part One - Overall:
• Target Market
• Planned Product Positioning
• Sales & Profit Goals
• Market Share

• New Product Development Process Step 5. Business Analysis
• Step 6. Product Development

• Business Analysis
• Review of Product Sales, Costs,
• and Profits Projections to See if
• They Meet Company Objectives

• If Yes, Move to
• Product Development

• If No, Eliminate
• Product Concept

• New Product Development Process Step 7. Test Marketing

• Standard
• Test Market
• Full marketing campaign
• in a small number of
• representative cities.

• Simulated
• Test Market
• Test in a simulated
• shopping environment
• to a sample of
• consumers.

• Controlled
• Test Market
• A few stores that have
• agreed to carry new
• products for a fee.

Product Life Cycle

• Time

• Product
• Develop-
• ment

• Introduction

• Profits

• Sales

• Growth

• Maturity

• Decline

• Losses/
• Investments ($)

• Sales and
• Profits ($)

Introduction Stage of the PLC

• Sales

• Costs

• Profits

• Marketing Objectives

• Product

• Price

• Low sales

• High cost per customer

• Negative

• Create product awareness
• and trial

• Offer a basic product

• Use cost-plus

• Distribution

• Build selective distribution

• Advertising

• Build product awareness among early adopters and dealers

• Growth Stage of the PLC

• Sales

• Costs

• Profits

• Marketing Objectives

• Product

• Price

• Rapidly rising sales

• Average cost per customer

• Rising profits

• Maximize market share

• Offer product extensions, service, warranty

• Price to penetrate market

• Distribution

• Build intensive distribution

• Advertising

• Build awareness and interest in the mass market

• Maturity Stage of the PLC

• Sales

• Costs

• Profits

• Marketing Objectives

• Product

• Price

• Peak sales

• Low cost per customer

• High profits

• Maximize profit while defending
• market share

• Diversify brand and models

• Price to match or best competitors

• Distribution

• Build more intensive distribution

• Advertising

• Stress brand differences and benefits

• Decline Stage of the PLC

• Sales

• Costs

• Profits

• Marketing Objectives

• Product

• Price

• Declining sales

• Low cost per customer

• Declining profits

• Reduce expenditure and milk the brand

• Phase out weak items

• Cut price

• Distribution

• Go selective: phase out unprofitable outlets

• Advertising

• Reduce to level needed to retain
• hard-core loyal customers